Carphone Warehouse considers split from TalkTalk broadband

17 November 2008 / by Rachel Mason
Carphone Warehouse is said to be considering splitting off its broadband business, TalkTalk, following a sharp fall in group profits.

According to reports, Charles Dunstone, the founder and chief executive of Carphone Warehouse, is looking into the possibility of spinning TalkTalk broadband into a separately listed company.

However, due to the current financial climate, it is believed that any plan to split the two would be unlikely to go ahead until well into 2009.

Carphone Warehouse is worth £1.3billion, which is less than half its value last year, when it was £3.4billion, and its shares have dropped from 372p in August 2007 to 145p now; it is thought that should the broadband business be split from the main company, as separate entities Carphone Warehouse and TalkTalk would be worth more.

Reports have suggested that should TalkTalk – which is the third largest broadband supplier in the UK after BT broadband and Virgin Media broadband – become available, BSkyB and Telefonica, which owns O2, would be prepared to bid up to £1billion for it.

BSkyB is already in talks with the Italian Tiscali broadband to buy its UK business for £450million in an attempt to become one of the broadband market's biggest players.

Carphone Warehouse was founded in 1989 by Dunstone with just £6,000 of savings. He began with a shop on Marylebone Road in London and is now Europe's largest independent mobile phone retailer.

Dunstone launched TalkTalk in 2003; in 2006 it bought AOL broadband and combined it makes up the UK's third largest telecommunication company with 2.8 million broadband customers and 10 per cent of all residential landlines.

TalkTalk also has its own mobile phone network, Fresh, which has around 400,000 customers.

Carphone Warehouse is due to post its profits tomorrow.

©Fair Investment Company Ltd